Sacha Berik is founder and CEO of mexad, a Display Engine Marketing (DEM) agency which launched in the UK earlier this year.

We interviewed Sacha about DEMs, the display ad market in Europe, as well as the emergence of ‘demand side’ agency ad networks and exchanges… 

Can tell me about mexad and its business model? 

Mexad is providing auction based bid management across multiple ad exchanges and yield managers. We offer this as a full service. We call our service DEM, which means Display Engine Marketing agency.

Our business model is comparable to SEM, Search Engine Marketing: we buy display media synchronised on behalf of agencies/advertisers across auction based technologies. We make a fixed commission for our service. .

Who are your typical customers? Which exchange platforms are you currently buying from?

Our typical customers are agencies who are planning & buying display campaigns. Our technology and optimisers buy and optimise across Doubleclick ad exchange, OpenX, Right Media, Appnexus, Admeld, Pubmatic, Rubicon Project and others.

Why are DEMs needed? What do they offer that Ad exchanges don’t?

DEMs offer the service to use auction based technologies safely and effectively. We have years of experience on both sides: publisher quality in ad exchanges & yield managers and – most importantly – the technical solutions to run campaigns synchronised across those auction based technology platforms.

It is comparable with PPC (pay per click) in search marketing: Why do you need a PPC-agency to buy keywords through Google? You don’t need to employ people internally to do it. And ad exchanges are much more difficult to use than Google Adwords. Each ad exchange is different and you need people who really focus on each single one of them. We have over 19 employees of which eight of are only focusing on ad exchange campaign management – and we are growing month by month. 

Ad exchanges have great technology, and of course they will focus on getting better and making buying safer. However, DEMs are the agencies that will be operating them on behalf of advertisers & agencies

How do you ensure quality of ad inventory? 

This is actually one of our main assets. We don’t rely on the self classifications ad exchanges offer. It is difficult to make the buying process very safe, and on the other hand not to lose any reach. It´s one of our USPs due to the fact that we are working with ad exchanges since 2005. Before accepting new publishers our sniffer technology reads out the URLs they are offering.

If URLs are not visible for us – we block the whole publisher. On the other hand we have databases with thousands of dodgy sites who we block for our advertisers in all ad exchanges. For example: In Right Media we are blocking more than 70% of all available media. We believe we are the only provider that can currently run brand safe campaigns across all major exchanges and yield optimisers worldwide

How can search help improve the effectiveness of display advertising?

I would say that display improves the effectiveness of search not vice versa. Search is pull marketing – means while searching for a specific topic you find a related keyword next to your search result.

By spreading display ads frequency capped and targeted to your target group advertisers (push marketing), you are able to increase the users’ searches for their product. We have some good case studies where display contributes to the overall marketing mix, and increases search volumes.

This is one of our core arguments to push SEM´s to get faster into the display market. The auction based technologies are their core competency. 
We also shouldn’t forget search re-targeting. We have capabilities to re-target users based on their search behaviour, even down to a keyword level. Now, that is a topic where search can improve the effectiveness of display advertising.

What are the major issues / problems in the European display ad market?

The main problem is the lack of responsibility regarding privacy concerns and lack of transparency regarding pricing of display inventory. Also an oligopolistic publisher structure in main European display markets means that some quality media is kept away from real-time-bidding (RTB). 

What is your view on the emergence of ‘demand side’ agency ad networks and exchanges? 

Agencies figured out that ad networks are doing amazing margins with arbitrage business. So they started to do it on their own. Agencies should have done it three to five years ago.

Now, in the age of auction based technologies, there is no real need for this kind of display purchase anymore – there is no advantage in pricing, and universal frequency capping as a last argument won´t justify this price intransparency.

Clients will figure out pretty fast, that using “the agency owned ad network for universal frequency capping” just means to increase the agency margins. In my opinion, agencies shouldn´t be traders. That´s not ethical and clients will understand that sooner or later.

Currently the agency owned trading units are hidden behind colorful acronyms pretending to uplift campaign performance and not agency margins. To keep it simple: agencies should source it out to stay as neutral as possible. Their job is to guide advertising clients how to use media best. Not selling their own media with profit to their clients. 

What effect will this trend have on traditional ad networks and exchanges?

I don’t see a bright future for ad networks without a clear USP. But less because of agency trading units, but more because of increasing price transparency. Hence anyone doing arbitrage business without a clear USP will eventually surrender. It won’t affect ad exchanges. They are a much smarter media source then ad networks and automating the buying process. 

How do you see mobile display advertising developing?

We will see a massive growth within mobile display in the next 12 to 24 months. The average CPM decreased more than 50% in just 6 months. This means that it´s not just a media source for early adopting advertisers. It´s a real advertising format which is getting its reality shock in terms of pricing up to 10 years faster than online display media did. 

How will online display advertising evolve over the next 12 months?  Who are the major players in the market?

Ad networks which only do arbitrage business without any measurable added value will start to disappear. Display advertising will grow but pricing for untargeted reach will decrease, as targeted reach will increase due to Real-Time-Bidding (RTB) technologies.

Premium publishers will reduce their efforts selling IAB-formats directly, while increasing their sales of integrated advertising solutions. 

Therefore we will have two main groups of major players:

  • Group one consists of premium publishers and ad networks with a clear and trustful USP, 
  • Group two are the ones using the new auction-based technologies. These players will contain media agencies, SEM agencies extending their auction knowledge to display and DEMs like mexad.